MILAN -- Fiat S.p.A. and Fiat Industrial S.p.A. signed a collective labor deal with their 86,000 Italian employees that increases shifts and shortens breaks in exchange for a 20-billion euro ($26 billion) investment plan.
Workers' base salary will rise 5.2 percent, Roberto Di Maulo, head of the Fismic union, said. Employees will also receive a 600-euro production bonus in 2012 and be paid 10 percent more for overtime, he said on Tuesday.
"The agreement signed today signals a historic moment for our company and its workers," CEO Sergio Marchionne said in a statement without providing the agreement's financial details.
The one-year contract, which goes into effect in January, is part of Marchionne's strategy of raising productivity at Italy-based Fiat's domestic plants as he aims to end losses in Europe by 2014.
Industry watchers voiced doubts that the agreement goes far enough in tackling Fiat's labor issues in Italy.
"Labor flexibility only helps if your plants are close to full capacity," said Erich Hauser, a Credit Suisse analyst in London. "With 30 percent plant utilization ratios, I struggle to see the benefit of having a more efficient labor force. Labor costs seem to increase with the new contract."
Burdened by a dearth of new models, capacity utilization at Fiat's Italian plants was just 38 percent in the first nine months of 2011, compared with 76 percent at the carmaker's other European factories, according to a Dec. 8 company presentation.
Building Chryslers in Italy
"With a more efficient Italian production footprint, Fiat is aiming to utilize the Italian production base to produce Chrysler product," Goldman Sachs analyst Stefan Burgstaller wrote in a note to clients Dec. 12. Fiat controls Chrysler Group.
The deal will apply to new hires as well, Di Maulo said. Fiat workers will have to ratify the agreement at every plant, where the unions will hold votes over the next two months, a spokesman or the Uilm union spokesman said.
Fiom Cgil, the carmaker's biggest union and the only one not to sign the agreement, has claimed the deal curtails worker rights. It led an eight-hour strike on Tuesday at the company's Italian plants. The union's roughly 10,000 workers will nonetheless fall under the agreement if it is ratified.
Some 22,000 factory workers in Italy assembled 650,000 cars in 2009, while the 6,100 employees at Fiat's plant in Tychy, Poland, built 600,000 vehicles. Without taking into account differences in models or working hours, Fiat's Italian workers made 30 cars a year on average, compared with almost 100 in Poland.
Chrysler's rebounding sales are helping prop up Fiat. Third-quarter earnings before interest, taxes and one-time items, which Fiat calls trading profit, rose to 851 million euros from 256 million euros a year earlier, with the U.S. company contributing 65 percent to the overall result. Fiat fully consolidated Chrysler's results from June.